Constant Dividends with Finite holding period
Let’s say that the Peak Growth Company is paying an annual dividend of $2.00 and has decided to pay the same amount forever
Joe wants to earn an annual rate of return of 12% on this investment, and plans to hold the stock for 5 years, with the expectation of selling it for $20 at the end of 5 years
How much should he offer to buy the stock at?